Coronavirus crisis cash threatens EU green plans

‘You don’t want to come out of this crisis only to stumble into the next crisis,’ says a West European diplomat.

EU governments are firing bazookas of cash to keep their economies from collapsing from coronavirus shutdowns, but that’s fueling fears that propping up polluting factories, airlines, carmakers and other companies will undermine the EU’s Green Deal.

“The risk is that a priority will replace another priority,” said Pascal Canfin, the French chair of the European Parliament’s environment committee. The EU “cannot afford to have an investment [package] that will not be consistent with the green goals … in sectors such as mobility, housing and energy and so on.”

His concern isn’t about short-term cash injections to keep companies and shops afloat during the crisis, but that governments will take investment decisions that will lock in pollution, and derail clean energy investments aimed at making the bloc carbon neutral by 2050.

“If we manage to get it right, it will speed up the Green Deal. If we get it wrong, meaning investing public money in high carbon activities or technologies, that means we will delay the Green Deal and make carbon neutrality even more difficult to reach,” Canfin said.

A host of EU governments —  including Germany, France, Italy, Spain and Poland — have all announced multibillion-euro stimulus packages. The European Commission last week put forward a €37 billion emergency funding plan. On Thursday, the European Central Bank announced a €750 billion stimulus package.

Those numbers dwarf what just a couple of weeks ago was seen as a very expensive Green Deal decarbonization program.

Reaching the current climate and energy goals for 2030 — which call for a 40 percent cut in emissions compared to 1990 levels — will require €260 billion of additional annual investments, according to the European Commission, and negotiations are now underway to boost the 2030 goal to as high as 55 percent. Brussels in January launched a plan to mobilize €1 trillion for implementing the Green Deal over the next decade.

But the aim now is to shovel money into the economy as fast as possible, without necessarily looking at green goals.

Fatih Birol, executive director of the International Energy Agency, warned over the weekend that governments “should not allow today’s crisis to compromise our efforts to tackle” climate change and clean energy transitions. In stimulus plans, governments should plan for large-scale investment in technologies such as solar, wind, hydrogen, batteries and carbon capture which would boost economies and speed up the roll-out of clean energies, he said.

“The combination of the coronavirus and volatile market conditions will distract the attention of policymakers, business leaders and investors away from clean energy transitions,” he said. Collapsing oil prices also threaten the green energy shift, by undermining efforts to promote energy savings and squeeze fossil fuels from the transport sector. Instead, he said, low prices should be used to reduce or scrap fossil fuel subsidies.

The economic damage wrought by the battle against the pandemic will make it difficult to recalibrate to fight climate change, said Poland’s Climate Minister Michał Kurtyka. Decarbonization can be beneficial in the long run, but that requires “a lot of resources … to be invested which will be challenging for weakened economies.”

Wavering Green Deal support

Coronavirus-induced economic shocks are already weakening support for the Green Deal and tough climate policies like the Emissions Trading System in coal-reliant countries, which had long feared that radically slashing emissions will be costly and hurt economic competitiveness and jobs.

Czech Prime Minister Andrej Babiš told reporters on Monday that the bloc needed to focus on its fight to contain the coronavirus and “forget about” the Green Deal for now.

Jan Zahradil, European Conservatives and Reformists MEP and a vice chair of the Parliament’s Committee on International Trade, said it was “crystal clear” that the EU needed to reconsider its Green Deal strategy: “Seriously. No post-virus economy in Europe will be able to handle it. It’s too expensive.”

Another Czech MEP, Tomáš Zdechovský, with the European People’s Party and vice chair of the employment committee, said he had called on Commission President Ursula von der Leyen to delay or weaken carbon dioxide emission standards for cars to help the reeling industry.

“We see it’s going to be a really huge problem for all the automotive companies now … they will need investments,” he said, warning that automotive production could suffer; carmakers this week shut production across the Continent.

Poland’s Deputy Minister of State Assets Janusz Kowalski tweeted Thursday: “The priority is lowering power prices for millions of Poles and for the Polish economy. How to do it? Disconnect the ETS — a useless gigantic cost for the economy.”

It’s part of a broader call to rethink the ETS, which has made investments in coal-fired power prohibitively expensive; Poland generates almost 80 percent of its electricity from coal.

“We will need to make sure that the policies we design in the coming months will help our economies to recover,” Kurtyka said, adding that changes to the ETS “may be necessary in the nearest future.”

The Central European pushback is riling Western European diplomats in Brussel.

“Climate change is real, like it or not, plus you don’t want to come out of this crisis only to stumble into the next crisis. So let’s keep an eye on what’s beyond our immediate horizon as well and at the very least not throw away what’s been achieved so far,” said a diplomat who asked not to be named.

Brussels-based officials, for now, are undeterred — arguing that it’s possible to tackle both challenges simultaneously.

“It is clear that we must deal with the economic impact of the coronavirus … why not already prepare the forward-looking investments of the Green Deal as a way to help the economy to recover from the current shock?” said Kadri Simson, the energy commissioner.

“The European Green Deal is not over and we will deliver and offer ever greener solutions once the pandemic is done,” Thierry Breton, the French commissioner in charge of the bloc’s industrial policy, said during a videoconference Thursday.

Eline Schaart contributed reporting.

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